If you and your partner are contemplating ‘tying the knot,’ have you discussed your financial future?
At Hay & Kilner we are here to support and advise our clients throughout their relationships. This often includes advising about protective planning for the future and providing sound advice about the ‘what if’ situations.
We understand prenuptial agreements can be an uncomfortable topic to broach; generally, they are not perceived as romantic, but in the unfortunate event that a marriage does break down this can help to avoid a messy, stressful and expensive disentanglement.
What is a prenuptial agreement?
A prenuptial agreement (colloquially known as a “prenup”) is a bespoke legal document that couples can consider entering into before getting married. The agreement records how their assets and liabilities will be divided if there is a separation and/or a divorce. It also outlines the rights and responsibilities of each party in the marriage.
Whilst this agreement is not automatically legally binding, upon divorce when a couple seek a financial order it is highly persuasive. Anyone that enters into a prenuptial agreement should expect the court to give effect to its terms provided they did so freely, with a full appreciation of its implications, unless it would be unfair to do so.
Advantages of having a prenuptial agreement
Firstly, a prenuptial agreement helps protect a wide variety of both parties' assets in the event of a divorce. The agreement may include assets such as future inheritance, or property transferred by parents into their children’s name whilst they continue to live in the home during their lifetime.
Another reason is to protect parties’ business interests. This can be particularly beneficial if one party has accumulated a significant amount of wealth before the marriage.
Prenuptial agreements can also help to reduce the amount of stress and conflict that can arise during a divorce. Both parties know exactly what to expect if their marriage does not work out; this can help reduce the time and money the couple would have to spend in court and make a divorce smoother for all involved particularly in cases involving children.
Are prenuptial agreements useful for everyone?
Traditionally, prenuptial agreements were mostly used by celebrities and the wealthy; however, this trend has changed. We advise clients with a wide range of different financial circumstances, and this forms the basis of their bespoke prenuptial agreement.
Regardless of the extent of a couple’s assets and/or liabilities there is a benefit in safeguarding your future.
Additionally, anyone with children from a previous marriage should consider having a prenuptial agreement. This is because the agreement can help protect a party’s assets for the benefit of their children if the marriage does not work out.
How to get a prenuptial agreement
Currently in England and Wales, there are no procedures in place to make a prenuptial agreement automatically legally binding. However, should either party seek to renege on the terms of a prenuptial agreement on divorce, the court will have regard to the prenuptial agreement and will hold the parties to the terms of the same provided it is fair in the circumstances to do so.
Ideally the below criteria will be met when entering into a prenuptial agreement:
Complying with these requirements should mean that a prenuptial agreement has the best chance of being upheld by a court presently and if/when the Government legislates on these matters (following calls for reform to the law since 2014) the best chance of becoming legally binding in the future.
Please note that there needs to be sufficient time for the preparation of the documents and any negotiation and amendment of terms prior to signing. It is therefore very important that anyone considering a prenuptial agreement takes legal advice by a solicitor who specialises in prenuptial agreements as early as possible.
How to discuss a prenup with your partner
Discussing a prenuptial agreement with your partner can be a difficult and sensitive subject. It is important to approach the subject with an open mind and respect each other's opinions. Many people accept that proposing having a prenuptial agreement is not a sign of distrust, rather, a way for both parties to have surety as to what their financial future holds should the marriage breakdown.
A prenuptial agreement does not make separation and divorce any more likely. If approached in a pragmatic and sensitive way, nuptial agreements should be considered as sensible financial planning, akin to insurance product if you will, in case of the worst. In many cases, the fact couples have a clear understanding of their respective financial positions can greatly assist them in dealing with financial issues within their relationship.
If you are considering a prenuptial agreement, our specialist divorce solicitors will be happy to discuss your specific circumstances and explain what your options are. You can also read our more detailed ‘Guide to Nuptial Agreements’.